Of course, dealing with the passing of a loved one can be one of the most trying times a person can be faced with. Usually, the last thing you want to deal with is navigating through the probate process while waiting to receive your inheritance. You may need to receive the inheritance right away to be utilized for one reason or another.
One option to obtain the financial benefits of your expected inheritance is to apply for a probate loan. This type of loan uses your expected future inheritance as collateral in order to secure the loan.
However, there are certain circumstances more ideal for a probate loan than others. The following are some instances when choosing a probate loan may be a good idea.
Strong financial need
If you are facing extraordinary financial needs, you may want to consider taking out a probate loan on your expected future inheritance. You may be dealing with a serious medical condition that requires paying large medical bills to treat. Perhaps you have an upcoming tax payment due or you are behind on your mortgage payments and you need to catch up fast.
Probate process likely to stall
There are times when it is obvious a dispute will happen during the probate process involving an inheritance you are expected to receive. If you find yourself in this situation you will likely be worried the probate process will be stalled which will force you to wait longer than you wanted to receive your inheritance. A probate loan will allow you to receive the financial benefits of your inheritance sooner than you otherwise would be able to with a disputed probate process.
Business or investment opportunities
Another reason you may want to consider a probate loan is if you happen to encounter a lucrative business or investment opportunity requiring you to act immediately. This means you may not have the option of waiting for the probate process to play out in order to receive your inheritance to fund your investment and business endeavors.
Obtaining a probate loan with an interest rate that is lower than your expected rate of return on your investment may be something to think about. However, potential risk of loss for any investment is something to seriously consider. You should talk to a financial expert to determine if this move is a sound business decision.
Should you apply for a probate loan?
Applying for a probate loan should be a decision you do not take lightly. You will not want to find yourself in a situation where you take out the probate loan and then end up not being able to keep up with payments. This means you will need to ensure there is little risk you will not ultimately receive your expected inheritance. Also, careful budgeting and financial planning is essential, especially if you plan to invest the funds from the probate loan into some type of business or investment opportunity.
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Any opinions are those of the author and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Raymond James and its advisors do not offer tax or legal advice. You should discuss any investment decisions, tax or legal matters with the appropriate professional.